IT firms eye growing IoT market

Companies tying up with global firms to build capabilities in IoT space

Large Indian information technology (IT) services providers are tying up with global technology hardware-centric companies to offer services in the internet of things (IoT), the connected machines space, eyeing the growing multi-billion dollar market.

Last month, HCL Technologies, the country’s fourth largest IT services company, announced a collaboration with IBM to design applications for remote monitoring, smart inventory management and smart buildings. Tech Mahindra recently announced a partnership with Dutch company Tomtom, which specialises in making smart products for navigation, to develop solutions for connected cars. Infosys, in the last week of September, said it was partnering with General Electric to develop new solutions in the IoT space.  Tata Consultancy Services (TCS), the country’s largest software exporter, said it had invested to develop capability in IoT and would continue to look for such partnerships. “TCS has developed its own IoT platform and we already have three-four partnerships with hardware firms. We will look for such partnerships whenever there is a need,” said N Chandrasekaran, managing director (MD).

IoT refers to connected machines and equipment, with the ability to send and receive real-time data. It is getting popular in America and Europe, key markets for Indian IT entities. Experts say one reason Indian IT service firms are forging partnerships to acquire newer capabilities in IoT is that they are trying to get into newer areas with their businesses facing slower growth.

Mid-sized IT services firm Mindtree, which has a focus on industrial engineering and automobiles says it has created a lot of intellectual properties (IPs) in IoT. “We have a lot of IP ready and we can partner with hardware firms to offer the solutions,” said Krishnakumar Natarajan, MD.  A study by TCS in July found companies are expected to spend a total of $103 million in 2018 on IoT, up from $86 mn projected for 2015.

While IoT offers huge opportunities for smart hardware manufacturers, chipmakers and telecom companies, analysts say there is lot of opportunity for IT services players in that space.

“IoT systems have different layers in their architecture that IT service players can bank upon to earn revenue, through systems integration. As the service is all about connecting machines, equipment and IT systems, there is significant scope for system integration. Also, they can develop applications for a variety of services,” said Amresh Nandan, research director at Gartner.

The number of such partnerships for IoT among IT companies would grow, say analysts. “They are partnering with several other companies to provide such solutions,” said Harit Shah, analyst with HDFC Securities.

For example, Tech Mahindra, selected by telecom service provider Aircel to provide IoT services in India, has partnered with Aeris Communications, a Silicon Valley-based IoT specialist in this regard, apart from its association with TomTom for connected cars.